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Is BOC Hong Kong (Holdings) Limited (HKG:2388) Potentially Undervalued?

Simply Wall St

BOC Hong Kong (Holdings) Limited (HKG:2388) saw significant share price movement during recent months on the SEHK, rising to highs of HK$28.90 and falling to the lows of HK$25.85. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether BOC Hong Kong (Holdings)'s current trading price of HK$26.90 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at BOC Hong Kong (Holdings)’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for BOC Hong Kong (Holdings)

What is BOC Hong Kong (Holdings) worth?

Great news for investors – BOC Hong Kong (Holdings) is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is HK$37.91, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, BOC Hong Kong (Holdings)’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will BOC Hong Kong (Holdings) generate?

SEHK:2388 Past and Future Earnings, February 11th 2020

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of BOC Hong Kong (Holdings), it is expected to deliver a relatively unexciting earnings growth of 3.8%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since 2388 is currently undervalued, it may be a great time to increase your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on 2388 for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 2388. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on BOC Hong Kong (Holdings). You can find everything you need to know about BOC Hong Kong (Holdings) in the latest infographic research report. If you are no longer interested in BOC Hong Kong (Holdings), you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.